Building Defects

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Is this a Renovation By-Law Fee Proposal Request?

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Legal Protections

The Home Building Act 1989 aims to protect residential property owners from defective building work by mandating warranties in all contracts for residential building work. Key features include:

Warranties

These warranties ensure that construction work is performed with due care, skill, and in accordance with specified plans. They are automatically included in contracts, even if not explicitly stated.

Transferability

Warranties benefit future property owners, including those in strata schemes.

Not sure where to start? Contact our team and we’ll point you in the right direction.

Duration

Warranties for building defects last between two and six years from the completion date, depending on the type of defect. After this period, recovery rights are forfeited.

Claims Process

If defects are proven (often requiring expert evidence), builders or developers may find it difficult to defend claims unless they can show the defect arose from a design fault.

Tribunal Claims

Disputes under the Home Building Act 1989 involving sums less than $500,000 are handled by the NSW Civil and Administrative Tribunal (NCAT), which typically orders rectification rather than monetary damages.

Builder Insolvency

A significant risk exists that owners may not recover losses if builders or developers become insolvent.

We can help with any of your questions. Get in touch and we’ll be able to assist you.

FAQs

What is Home Owner Warranty Insurance?

To address builder insolvency risks, residential building contracts must include Home Owners Warranty Insurance, which serves as a safety net recovering costs when builders cannot complete work or rectify defects. This insurance is effective only when:

The builder becomes insolvent, dies, disappears, or has their license suspended due to non-compliance with an NCAT order.
Owners must promptly notify insurers of defects (even when a claim has not been made); late notifications may lead to denial of coverage.

What is a Strata Building Bond and Inspection Scheme?

For strata buildings of four or more storeys, Home Owners Warranty Insurance are not required since 2003. However, since January 1, 2018, a Strata Building Bond and Inspection Scheme (SBBIS) has been implemented by NSW Fair Trading. This scheme mandates that developers lodge a bond equivalent to 2% of building costs with NSW Fair Trading. To recover this bond:

Developers must obtain defect reports from approved consultants within specified timeframes.
If defects are identified during final inspections, bond funds can be used for rectification costs.

Any other Insurance offered?

As the alternative to the SBBIS, in the last 12 to 18 some developers opted to obtain a decennial (10 year) insurance policy in lieu of the 2% bond scheme. Only a small take has occurred to date as it may be relevant in the medium term for 4 or more storeys buildings.

Who pays?

Ultimately, owners bear the financial burden of rectifying building defects. The legal and insurance frameworks do not offer complete protection; many owners lose recovery rights by failing to act within required timeframes provided under the relevant legislative frameworks.

How does the Design and Building Practitioners Act 2020 impact me?

The Design and Building Practitioners Act 2020 (NSW) expands potential negligence claims related to building defects. Key aspects include:

Duty of Care: All parties involved in construction owe a duty of care to avoid causing economic loss due to defects. This duty extends beyond builders to designers and project managers.
Limitation Period: Owners have six years from when a defect (or defects) becomes first apparent to file claims.
Exemptions: Certifiers are exempt from this duty under the new legislation, leading owners to consider common law negligence claims against them.
Professional Indemnity Insurance: Many construction professionals carry insurance that can provide financial recourse for successful claims.
Retrospective Application: The duty of care applies retroactively to defects identified after 2014 however claims are subject to a 10 year long stop limitation period.

More Building Defects Questions? Download our Building Defects Guides.

Proactive Measures for Owners

Strata owners should take several proactive steps to manage potential building defects effectively:

Obtain Early Legal Advice

Understand warranty expiration dates based on when building work was completed.

Verify Insurance Coverage

Confirm whether Home Owners Warranty Insurance is in place and identify the insurer.

Monitor Bond Requirements

Ensure compliance with the Strata Building Bond and Inspection Scheme if applicable.

Need some advice?

Get in touch

Claims Process

Keep detailed records of reported defects by lot owners, including photographs and repair documentation.

Communicate with Builders/Developers

Provide defect reports before warranty expiration and demand rectification responses.

Initiate Legal Proceedings if Necessary

If builders fail to address significant defects before warranties expire, commence legal proceedings promptly to preserve recovery rights.

Conduct Building Reports

Obtain independent building reports well before warranty expiration— typically six months prior.

Navigating Building Defects...

If you're navigating the complex world of building defects, Bannermans Lawyers provides the legal tools and guidance you need to protect your interests. Whether it's structural defects, water damage, roof leaks, damp, cracks or more serious issues like concrete cancer or building settlement, we help you understand your rights and responsibilities.

Our team can assist in reviewing defects reports, advising on building inspections and explaining your entitlements under the Home Building Act 1989, Design and Building Practitioners Act (D&BP Act), and the Home Building Compensation Fund (HBCF). We regularly work with strata managers and owners to interpret statutory warranty periods, assess liability, and prepare for NCAT or other tribunal proceedings.

We also offer legal guidance for dealing with builder insolvency, accessing home warranty insurance and pursuing claims involving leaky buildings, cracked tiles, planter boxes and failed retaining walls. Bannermans can advise on your options for rectification, help you respond to Declared Designs requirements and clarify your obligations under initiatives like Project Remediate and Project Intervene. From preparing expert evidence to supporting dispute resolution processes, we empower our clients with a clear understanding of legal procedures, risks and solutions—whether it’s related to fire safety, waterproofing, water ingress or broader compliance matters linked to your building bond and development.

Bannermans Lawyers understands the frustrations and concerns when owners discover building defects.

With our team of knowledgeable experts, we help all types of properties, from multi storey unit blocks to free standing homes.

Our goal is always to resolve your defects in a timely and cost-effective manner. These include:

Resolving and managing building defect claims, including complaints and Tribunal and Court proceedings
Assisting with alternative disputes resolution mechanisms
Providing advice on applicable statutory warranty periods
Dealing with Home Warranty Insurance claims
Home Building Act 1989 advice
Building contracts and tenders
Commercial arbitration
Expert determination
Council orders
Drafting remedial works contracts
10-year retrospective right advice
Building bond advice
Cladding defect advice